Approvals shatter market forecast, up 9.9 per cent

Approvals for new dwellings were up in May, according to the ABS.
Photo: Andrew Harrer

by
Larry Schlesinger

Dwelling approvals rose a much better than expected 9.9 per cent in May to 16,425, the first gain in four months, according to the latest seasonally adjusted monthly figures from the ­Australian Bureau of Statistics.

Market expectations were for a 3.2 per cent rise. ANZ had forecast a 10 per cent rise in May.

HIA economist Geordan Murray said the May result, following three consecutive months of declines, ­provided confidence the recovery had a way to run yet.

“The housing recovery, which was initially confined to NSW and WA appears to be gaining broader momentum. Approvals in the three months to May are markedly higher than the same time last year in all jurisdictions. ACT is the only exception," he said.

CommSec economist Craig James said it was likely increases in land sales, healthy building approvals and solid new home sales would result in a greater supply of homes over 2014 meaning “price gains will become more restrained later in the year".

Most of the rise in May was in the more volatile units sector, which rose 27.2 per cent to 6950. Detaching house approvals were still weak, up just 0.5 per cent to 9278.

Building approvals had strong gains in Queensland (44.9 per cent) and NSW (18.7 per cent) on a seasonally adjusted basis but fell in Victoria and South Australia. They were unchanged in WA.

Wilhelm Harnisch
CEO of ­Master Builders Australia said the strong result in May demonstrated “continuing strength of demand for units and ­apartments" but was “patchy" with growth restricted to NSW, Queensland with an emerging recovery in ­Tasmania.